6-1 Business-to-Business Marketing Marketing of goods and services that businesses and organizations buy for purposes other than personal consumption –Manufacturers –Wholesalers –Retailers –Government agencies –Hospitals –Universities

6-2 West LB Some companies market products exclusively for other companies

6-3 Business Markets Generally, the same principles are true for business and consumer customers There are characteristics that make B2B buying more complex –Multiple buyers –Number of customers –Size of purchases –Rational decision making –Geographic concentration

6-4 Central Fire Truck Sellers of fire- fighting equipment have a limited number of customers

6-5 B2B Demand Characteristics Derived Demand Inelastic Demand Fluctuating Demand Joint Demand

6-6 Derived Demand

6-7 Inelastic Demand Inelastic demand means that business customers buy the same quantity whether the price goes up or down Example: A BMW Z4 Roadster 3.0i has a list price starting at just over $37,000. If the price of tires, batteries, or stereos goes up or down, BMW still must buy enough to meet consumer demand for the Z4.

6-8 Fluctuating Demand Small changes in consumer demand can create large increases or decreases in business demand Acceleration principles (multiplier effect) means that changes in consumer behavior have a ripple effect through several related businesses

6-9 Joint Demand Joint demand occurs when two or more goods are necessary to create a product Companies try to avoid dependence on specific suppliers by dealing with multiple suppliers whenever possible

6-10 Classifying B2B Markets

6-11 The Nature of Business Buying Buying Situation Professional Buyer Buying Center

6-12 The Buying Situation A buy class framework identifies the degree of effort required of the firm’s personnel to collect information and make a purchase decision Straight rebuy Modified rebuy New task buying

6-13 Straight Rebuy DHL hopes its business customers will use the company for all straight rebuy purchases

6-14 Modified Rebuy The purchase of office equipment is a modified rebuy for most B2B customers

6-15 New-Task Buy When GE develops new medical equipment, hospitals face a new-task buy

6-16 The Professional Buyer Titles: purchasing agents, procurement officers, director of materials management Focus on economic factors beyond the initial price of a product, including transportation and delivery charges, accessory products or supplies, maintenance, disposal costs, etc. Large firms practice centralized purchasing - one department does all buying

6-17 The Buying Center Group of people in the organization who participate in the decision-making process May include production workers, supervisors, engineers, secretaries, shipping clerks, and financial officers

6-18 Roles in the Buying Center Initiator begins the buying process User needs the product Gatekeeper controls the flow of information to other members Influencer dispenses advice or shares expertise Decider makes the final decision Buyer executes the purchase Insider has valuable knowledge

6-19 Business Buying Process Problem Recognition Information Search Alternative Evaluation Product/ Supplier Selection Postpurchase Evaluation

6-20 Problem Recognition Users can aid in problem recognition

6-21 Considerations in Supplier Selection On-time deliveries Single sourcing vs. multiple sourcing Outsourcing Reverse marketing

6-22 Electronic B2B Commerce Internet exchanges between two or more businesses or organizations Allows marketers to link directly to suppliers, factories, distributors, and their customers Reduces time necessary to order and deliver goods, track sales, and get feedback

6-23 RackSpace B2B e-commerce has created a new industry of companies that manage other companies’ data

6-24 Intranets, Extranets, and Private Exchanges An intranet is an internal corporate computer network that uses Internet technology to link company departments, employees, and databases An extranet allows outsiders to the organization to access its intranet A private exchange links invited groups of suppliers and partners over the Web

6-25 Groove Networks This innovative system allows people to share ideas with team members around the world

6-26 Prudential’s Extranet

6-27 Security Issues Authentication - making sure only authorized individuals are allowed to access a site Firewalls - combination of hardware and software that ensures only authorized individuals gain entry Encryption - scrambling a message so that only another individual has the right “key” for deciphering it

6-28 e-Security Online ZoneAlarm is one of several security software programs on the market today